To understand how agriculture and poverty interact, we analysed water availability, productivity and institutions for the Andes basins. Water limits agricultural productivity in the southern basins but is plentiful in the northern basins where steep slopes or poor land and water management limit productivity. The dominance of small, steep basins results in important upstream-downstream linkages. The greatest challenge to improving the productivity of water in the Andes basins is to regulate water quality better for multiple uses and to negotiate fair and transparent compensation for upstream providers of water-based ecosystem services for the benefits that they provide to downstream users. © 2010 International Water Resources Association.